Des Moines-based Principal Real Estate Investors did not respond to questions about whether it will abide by a newly founded hotel industry group's lending standards amid the ongoing COVID-19 pandemic that has gutted the hospitality industry.
Principal Real Estate Investors did not respond to Des Moines Sun questions about lending standards recently issued by HOTELSTogether, itself recently formed by hotel owners following government-mandated shutdown of the hospitality industry.
"Loan servicers must help hotel owners protect the long-term value of their businesses for employees and our communities, lenders and bondholders, and other stakeholders," HOTELSTogether says on the landing page of its website. "This should include flexible repayment plans until positive cash flows are restored. HOTELS Together has developed 'Fairness in Hotel Lending Standards,' a balanced lending standard that addresses the needs of hotel borrowers while preserving asset values for our lenders."
Without those standards, hotel owners may face bankruptcy as the hospitality industry hasn't received the sort of government aid and bailouts that many lenders have, HOTELSTogether officials say.
Principal Real Estate Investors is the real estate investment group of Principal Global Investors, also based in Des Moines.
The nation's leisure and hospitality industry has been the business sector hardest hit by the ongoing pandemic, according to a report issued by the American Hotel and Lodging Association (AHLA). The industry sustained as many job losses as construction, government, manufacturing, retail, education and health services combined, according to the report issued earlier this month.
The hospitality industry endured a loss of 7.7 million jobs, or 47 percent of total positions, in one-month net decline in payrolls, according to the AHLA report, which cited data from the U.S. Bureau of Labor Statistics.
The hotel industry is "on the brink of collapse," according to a separate AHLA report.
HOTELSTogether's multi-point Fairness in Hotel Lending Standards includes no additional costs levied on borrowers, including no default interest rate, special servicer or related fees, extension fees or late fees.
Other points in the lending standard include automatic approval of relaxed Capex, Funding of PIP, or FF&E Reserves; loan repayment and prepayable at any time without penalty or defeasance; 90-day forbearance and lender protected cash management.
Des Moines Sun asked whether Principal Real Estate Investors would publicly agree to abide by the Hotel Industry Covid Crisis Fairness in Hotel Lending Standards as promulgated by HOTELSTogether.
Des Moines Sun also asked whether Principal Real Estate Investors has offered to waive principal or interest payments to borrowers during the coronavirus pandemic or if hotel owners and their employees should bear the full brunt of the crisis.
Principal Real Estate Investors has declined to respond to these questions.
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